Economic Thoughts and Essays

The classical consumption models (Modigliani’s Life-Cycle hypothesis and Friedman’s Permanent Income hypothesis) tell us that consumption is dependent on life-time income. This is based on the assumptions of credit market access (so we don’t have liquidity constrained individuals) and certainty. In short this means that consumption will only change if income changes, and a temporary Read more about Changes in Consumption Should be Unpredictable. Discuss[…]

The advent of the neoclassical approach to establish economics as a science, led to the disappearance of many psychological insights already made by economists, for example Smith says “we suffer more… when we fall from a better to a worse situation, than we ever enjoy when we rise from a worse to a better.” And Read more about Behavioural Economics – Some notes[…]

Labour matching models stem from the fact that when a worker becomes unemployed, he needs to look for a job and such a process is not instantaneous. He cannot simply occupy any vacancy, but has to search for a job in a certain area, in a certain profession and which matches a list of criteria Read more about Labour Matching Models[…]

Aggregate data do not lend support to neoclassical business cycle models. Discuss this statement paying particular attention to inter-temporal decisions about consumption, labour/leisure and investment. According to Prescott the reason for business cycles is due to technology shocks which manifest itself as changes in the TFP productivity term (or Solow residual) A. Summers criticises this Read more about Neoclassical Business Cycles[…]

1.a) “The use of data from national accounts in measuring inequality presents many difficulties”. Explain. (readings 4-6) b) Explain the difficulties involved in setting a local poverty line, within a country (reading 2 is useful here but also lectures) . c) The use of the ‘dollar a day’ poverty line is very popular in everyday Read more about Measuring Inequality[…]

In the context of the search model of the labour market, Peter Diamond (1971) raised the following critique: Firms have no incentive to offer a wage higher than the reservation wage. Discuss. Economic theory may initially have us believe that firms shouldn’t offer a higher wage than the reservation wage of workers. If they did Read more about Search Markets[…]

The credit channel is an enhancement mechanism for traditional monetary policy transmission, not a truly independent or parallel channel. Discuss The traditional monetary policy transmission works through a number of conventional channels: interest rate effect, exchange rate effect, asset price effect and through expectations. The stance of monetary policy acts as a signal to firms Read more about The Credit Channel[…]

Literally, social ontology is the study of social nature and it concerns itself with “how existents exist”1. It is the study of the social realm which includes the “domain of all phenomena, existents, properties”2 whose existence depends upon humans and their interactions. To paraphrase Little “almost all human action is social: socially oriented, socially embedded or socially Read more about What is Social Ontology and why should Economists care?[…]

We are currently updating the look of the website, so this is our new landing page. Over the course of the next year we will be consolidating material, making information easier to find and the site easier to use. You can still access the old site using the following links: Lessons Revision Resources Tools About Read more about Website Revamp[…]

The debt-growth nexus has received renewed interest among academics and policy makers alike in the aftermath of the recent global financial crisis and the subsequent euro area sovereign debt crisis. Discuss whether there exists a tipping point, for public indebtedness, beyond which economic growth drops off significantly; and more generally, whether a build-up of public Read more about The Relationship Between Debt and Growth[…]